NEW ORLEANS, Aug. 25 (UPI) -- Despite tough industry conditions, bidding that emerged in the latest lease shows the U.S. Gulf of Mexico remains good energy acreage, the government said.
Only three companies emerged with bids totaling $18 million and they took up only a fraction of the 23.8 million acres on the auction block. Abigail Ross Hopper, the director of the Bureau of Ocean Energy Management, said even that amount of interest in a weakened energy market was a success.
"Though this sale reflects today's market conditions and industry's current development strategy, the bidding confirms that there is continued interest in the deepwater areas of the Gulf of Mexico," she said in a statement.
The government estimates the range of economically recoverable reserves at between 116 million barrels and 200 million barrels of oil, and 538 billion cubic feet and 938 billion cubic feet of natural gas. Building on 10 sales already held under the current five-year lease program, the government said it garnered nearly $3 billion in total revenue.
Energy companies are investing less in exploration and production than they were two years ago when oil sold for more than $100 per barrel. A report from the U.S. Energy Information Administration found the offshore U.S. areas are less sensitive to short-term volatility in crude oil prices than interior shale basins.
Nearly all of the offshore oil and natural gas produced in the United States comes from the Gulf of Mexico and reserves there account for 16 percent of the total oil and 4.5 percent of the total natural gas produced.
Randall Luthi, the president of the National Ocean Industries Association, acknowledged the interest in the latest lease was modest despite the buffer against market volatility. He countered statements from environmental groups who traveled to New Orleans, the site of the auction, to protest by suggesting devastating flooding in Louisiana was the result of the reliance on fossil fuels.
"It's hard to miss the irony of activists traveling to such protests in gasoline fueled vehicles," Luthi said in statement.
BOEM said the lease was held after extensive environmental analysis and a public comment period. The agency last week published a notice of intent in the Federal Register for an environmental impact statement on the proposed lease of 72 million acres in the Gulf of Mexico for 2018.